May 2017 Meeting: Steering Through Uncharted Waters: Planning in Times of Financial Uncertainty

Steering Through Uncharted Waters:  Planning in Times of Financial Uncertainty

These are uncertain times for people and organizations dedicated to providing crucial services to under-served U.S. Communities. But an unclear environment does not mean we should sit still and wait.

Jihye Gyde and Nicole Curtain, two senior consultants from Nonprofit Finance Fund, facilitated a session
on concrete first steps for assessing your organization’s financial situation and options to inform
decision-making. These are uncertain times for people and organizations dedicated to providing crucial
services to under-served U.S. communities. But an unclear operating environment does not mean we
should sit still and wait. This is exactly the time to prepare our organizations for whatever change is
coming in a thoughtful, data-driven way.  Topics included: gauging your organization’s financial health,
adaptability, and risk tolerance; assessing risks and opportunities; and developing potential scenarios
and corresponding action plans.

One of the main concerns for nonprofits in planning for the future is the predictability of funding. There
are 6 basic steps that agency leaders should take when planning for an uncertain future. First, open a
dialogue with your staff, board, and stakeholders about what everyone is concerned about. Second,
assess your current financial situation, risks, and opportunities. Do a “pulse” check and focus on the
state of your unrestricted operating revenue. How many months of unrestricted cash do you have?
Determine where your agency stands financially – do you have room to breathe or do you have to take
action now? Can the agency afford to absorb a deficit? On you balance sheet, identify the drivers of
your assets and identify the drivers of your liabilities. Are your receivables collectible and are your
building and equipment being used efficiently?

Third, identify and focus on what issues are controllable by you. Start with the shortest term and
proceed to the longest term. There are financial, human, intellectual, and social capital considerations to
take into account. You need to think through the various levels of change.

Fourth, do the planning –develop various scenarios and what steps you need to take. It is important to
write down each scenario and think it through. Identify the main issues and opportunities, what are the
priorities, and identify the areas of risk, variability, and viability. Identify the range of changes that may
occur, articulate the assumption that you are making, and then create an actionable plan with a
timeline, benchmarks, and objectives and priorities. You should o a program economic analysis, do a
cash flow projection, and determine how much working capital you will need. You can do a go no-go
analysis, an if-then analysis, a decision money/mission matrix, or develop some useful management
dashboards. Senior Managers and the Board should be involved in developing the scenarios. The Board
is used to looking at actual to budget financial results, but you have to look beyond revenue and the
budget. Look at the range of deficits or surpluses that your agency can absorb.

Fifth, monitor developments and operationalize your plan. Develop the means to monitor your plan and
a way to check in with staff to monitor developments. A plan of action should include: timeline,
benchmarks, identify the information /date needed to manage the plan, and identify the staff or team
responsible for implementation.

Finally, share information and develop a culture of collaboration. The goal is not necessarily to provide
answers, but rather to foster a healthy dialog about the future. Communicate often with staff and try
not to be reactive, rather be proactive. Adopt sound financial practices which allow the agency to take
advantage of opportunities and avoid pitfalls.


Link to the presentation: